Campaign for Vermont, a 501(c)4 “nonpartisan” advocacy group, is criticizing state government spending trends as “unsustainable” over the long term, calling for a renewed political focus on fiscal stability.
In a 30-page report analyzing state budget trends from 2008 to 2012, the group highlights a $908.7 million or 22 percent increase in the state budget compared to 2008 levels.
The report targets the Agency of Human Services. Tom Pelham, a group co-founder and former state tax commissioner, told reporters at a Montpelier press conference that despite a 29 percent increase in human services spending since 2008, life for poorer Vermonters hasn’t significantly improved. Pelham presented charts and statistics which he said showed a widespread political failure to carefully control spending or reform state services for efficiency.
“It’s very clear, I think, to most observers that we do have a structural imbalance in our state budget, between what is going on in spending and what is going on in the underlying economy and the demographics in Vermont,” Pelham said.
Increases of more than 10 percent in state spending, in sectors like education, health care and human services, are disproportionate, Pelham said, compared with small percentage increases in population and median household income.
“We basically have double digit spending growth and an underlying economy over a five-year period that is growing in the low single digits at best,” he said.
Pelham argued that the state’s stagnant economy didn’t justify those spending increases. “If we stay on this course, this unsustainable course, we will be in trouble,” he said.
Doug Racine, secretary of the Agency of Human Services, said the economy the Shumlin administration inherited had been influenced partly by Pelham, who served in the Douglas administration as a “key player,” from 2008 to 2010.
“When the Shumlin administration came in, we found a lot of problems, and thought that Vermonters were not getting the same quality of services they were getting previously,” Racine said.
Racine cited improvements to the Adult Protective Services division, oversight of contracting, and the mental health system, as ways his agency had improved the lives of Vermonters.
“Perhaps it’s a fair criticism to say that over those five years, Vermonters weren’t doing better,” said Racine. “But I’d say there was a downward trajectory when Gov. Shumlin came into office, and an upward trajectory now.”
Racine said declining federal revenues and increasing caseloads together accounted for the rise in human services spending. In a struggling economy, he said, residents tend to rely more on state services.
“That’s the conundrum we face in human services,” said Racine. “Generally, when the [state] revenues are the lowest, the needs are the highest. … The need is great out there. Middle class folks are struggling with costs of health care, housing, fuel, and all of that, so we’re seeing increased demands to help people struggle with the necessities of life.”
“We took $8 million from a reserve, in the winter, and put it into fuel assistance, so that people can get the fuel they need so they don’t freeze in the winter,” he said. “That’s some increased spending.”
Pelham said Govs. Richard Snelling, Howard Dean and Jim Douglas all kept spending increases at a sustainable level, but he fell short of criticizing Gov. Peter Shumlin for being fiscally irresponsible.
Responsibility for increased spending and little reform rests with lawmakers from both parties in recent years, he said, who failed to make tough spending cuts. Pelham says generous federal stimulus funds totaling more than $920 million from 2009 to 2012 made the Legislature complacent.
Significant human services cuts are widely expected to be unveiled in the governor’s budget later this week. Despite pointing out the 29 percent AHS budget increase as a cause for concern, Pelham said he wouldn’t necessarily back cuts to AHS.
Pelham says he prefers saving money through efficiency reforms, but cuts must remain an option.
Campaign for Vermont wants Shumlin to limit this year’s spending increase in the budget to inflation plus population growth, or about 2.55 percent. The group also urges the governor to improve the state’s benefits management system and to end cost shifting.
Link to the Campaign for Vermont budget white paper.